The reality of interconnected national economies has provided economic agents with propitious opportunities to minimise their tax liabilities through aggressive tax planning. The problem of tax minimisation through aggressive tax planning is particularly relevant in the tourism industry, where actors are usually not in the tax jurisdiction in which they operate.
Tourism plays a significant role in the economies of many countries of the Global South. In countries located in the Pacific islands, for example, the industry serves as the primary source of foreign currency earnings. The tourism sectors in these countries are especially vulnerable to aggressive tax planning because the dominant economic agents are often large cross-border entities with sophisticated networks of related parties that allow them to minimise their tax liabilities. A prime example is the experience of Fiji where a substantial portion of transactions that concern its tourism sector are carried out outside its tax jurisdiction. These economic agents use offshore, related parties to act as travel agents, who collect monies from tourists and remit a net amount to Fiji, which is then declared for tax purposes.
On 14 July 2022, the Network of Tax Organisations (NTO) will hold a webinar on ‘Understanding and Addressing Patterns of Aggressive Tax Planning in the Tourism Industry’ to discuss how tax administrators can understand and tackle the problem of tax minimisation and aggressive tax planning in the tourism sector and beyond.
During the Webinar, representatives from the tax authorities of Fiji and Nigeria will share their experiences in dealing with the issues of tax minimisation in their respective tourism sectors.
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